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Average rents on the rise as London hits new record

Average rents on the rise as London hits new record

Rents in April rose right across England and Wales, with average rents 3.9% higher than the same month last year – but tenants struggled to keep up with their payments.

According to LSL, parent company of Your Move and Reeds Rains, the average monthly rent is now £736 a month, with London rents standing at a new record of £1,110 per month – 7.6% higher than a year ago.

David Newnes, director of LSL Property Services, said: “Rents everywhere are higher than a year ago – at a time when pay has crept up at the slowest rate in years.
 
“Landlords across the UK have increased the stock of rental properties by around 10% since 2008 – but the more fundamental squeeze is still coming from a lack of new building.”
 
The total annual return on a rental property rose to 5.9% in April, LSL estimates. This represents an average return of £9,679 with rental income of £7,807 and assumes a capital gain of £1,872.

If rental property prices maintain the same trend as the last three months, the average investor in England and Wales could expect to make a total annual return of 5.7% per property over the next 12 months – equivalent to £9,496 per property, but before any mortgage payments and all other costs. 
 
Total arrears in April were £282m, LSL estimates, compared to £284m in March. This equates to 8.4% of all rent across England and Wales, compared to 8.5% of all rent in March.

Move with Us, the property services network, also now produces rental statistics, which put rents far higher than LSL.

Move with Us puts advertised London rents at £2,182 per month and average rents across the country at £966 per month.
 
Robin King, director of the firm, also believes that the rental boom could be coming to an end.

He said: “The residential sales market is improving and media reports show that mortgages are more readily available, which is likely to be bolstered by the Government’s new Help to Buy scheme.

“These factors mean it is likely we will see an adjustment in the rental market and a move away from renting as purchasing property becomes more accessible.”

The LSL rental index reports on achieved rents across its network of letting offices.

The methodology used by Move with Us is “formulated in conjunction with economic research academics, and is based on the idea that weightings and conditions create a better representation of the market, whilst preventing outlying values from skewing the data”. We asked Move with Us for a plain English explanation as to what this meant, but have not yet had an answer.